Home :: Abstract - Small Business Lending in Massachusetts, 2005-1008

Abstract - Small Business Lending in Massachusetts, 2005-1008

In its eleventh report on small business lending patterns, the Massachusetts Community & Banking Council (MCBC) provides an analysis of small business lending across the state and the impact of small business lending on the state’s overall economy.  The report also focuses on small business lending in low-income and traditionally underserved areas.   

 

Small Business Lending in Massachusetts, 2005-2008 analyzes lending data collected under the Community Reinvestment Act (CRA) for year ended December 31, 2008 and provides comparisons to 2005 through 2007 lending data.  In addition to the data in the report, MCBC is also providing data on all Massachusetts cities and towns in a set of on-line tables.   The report was prepared for MCBC by Stuart Ryan of BankMaps LLC.  Among the report’s important findings: 

Loan Volume 

  • The number of small business loans in Massachusetts declined 24.2 percent from 2007 to 2008 while the dollar amount of small business loans declined 13.2 percent, slightly higher rates than the rest of New England and the country as a whole.

 

  • The rate of growth in the number of credit card loans fell dramatically from an increase of 29.4 percent in 2007 to a decline of 26.1 percent in 2008.  The growth of loan dollars also reversed course, from an increase of 17.0 percent in 2007 to a decline of 26.0 percent in 2008.

 

  • Loans to businesses with revenues of $1 million or less accounted for 26.9 percent of the total number of loans in 2008, down from 35.8 percent in 2007.  Total loan dollars to very small businesses also declined, to 29.9 percent of all loan dollars, down from 35.3 percent in 2007.

 
  Geographic Distribution 

  • Only two counties in Massachusetts (Berkshire and Dukes) experienced overall increases in CRA-reported small business lending volume in 2008.

 
  Lenders 

  • A total of 167 lenders reported small business loan activity in Massachusetts in 2008, including 46 lenders that are either headquartered in Massachusetts or have a substantial presence in the state.

 

  • Massachusetts-based lenders reported a total of 22,177 small business loans in 2008 for $3.4 billion, representing 9.4 percent of the total number of small business loans in the state and 62.3 percent of loan dollars.

 

  • In 2008, local lenders experienced smaller overall declines in lending volume than credit card lenders and other out-of-state lenders.  As a result, local lenders saw their share of small business loan dollars increased to 62.3 percent, up from 57.9 percent in 2007.

 

  • Credit card lenders accounted for 77.5 percent of the total number of reported small business loans and 25.2% percent of loan dollars in 2008.

 
  Lending in Traditionally Underserved Areas 

  • Borrowers in low- and moderate-income census tracts saw a significant decline in the number of small business loans, from 56,851 loans in 2007 to 41,807 loans in 2008.

 

  • While overall lending volume declined across all income categories in 2008, lower-income areas experienced a smaller decline in the dollar amount of loans than higher income areas, but a larger decline in the number of loans.

 

  • As was the case in previous years, the lowest lending rates in 2008 were reported in lower income, high minority communities in Massachusetts while the highest lending rates were reported in higher income, white communities.  In addition, the lending rates declined slightly more in high minority communities than in predominantly white communities.

 The report and its appendices, as well as earlier reports in the small business lending series and other MCBC reports are available on MCBC’s website at www.mcbc.info.